Posts in Guest Contributors

In their submission to the Washington Post’s series this week on so-called “patent reform” and “patent trolls,” James Bessen and Michael Meurer repeat the same junk science claims we’ve all heard many times before. This narrative is the unfortunate byproduct of unreliable and unscientific studies. This past March, I joined forty economists and law professors in a letter to Congress expressing “deep concerns with the many flawed, unreliable, or incomplete studies about the American patent system” that have been injected into the patent policy debate. Unfortunately, Bessen and Meurer themselves have produced some of this junk science, infected with mistakes that render their conclusions utterly meaningless. For example, they once estimated that litigation by so-called “patent trolls” cost the U.S. economy $29 billion in 2011. This figure has been thoroughly debunked and criticized for the fundamental and methodological flaws, such as using proprietary, secret data collected by a company that has a stake in lobbying for more legislative revisions to patent litigation rules.

While the startup probably had an initial 100% market share due to a temporary de facto monopoly, such share rapidly decreases as soon as others start selling to the same customers. Worse, many times, one of those fast followers is a large entrenched company that has deep R&D teams, seemingly unlimited budgets, well-known brands and established distribution channels in many key geographies that took decades to build. They can play catchup really fast. In other words, the only thing going for the startup at that point (assuming it could not possibly achieve this scaling up over such a short period of time) is the uniqueness of its technology and its ability to out innovate others. This in turn is only true if the new technology it brings to market is adequately protected against free riders; otherwise one is simply doing others’ bidding and subsidizing their R&D… In short, innovation without protection is simply a form of philanthropy!

Puerto Rico was discovered by the Spaniards on Nov. 19, 1493, during Columbus’ second voyage. For the next 400 years, it was a Colony of Spain, with two brief interruptions, but with no formal transfer of ‘ownership’. The patent activity with (at the time) a foreign power (the USA) is surprising in the latter parts of the 19th century. This article takes a look at the patents issued by the USPTO to Puerto Rico residents within the period.

In October, Italy, one of the last holdouts to the European Unitary Patent, joined the party, leaving Spain and Croatia as the only members of the 28-member European Union (EU) opting out. As the fourth largest market in Europe in terms of population, gross domestic product (GDP) and patent validation, Italy’s reversal is a huge step forward. According to Benoît Battistelli, president of the European Patent Office (EPO), ”Italy’s accession will … render the Unitary Patent more attractive to companies from other European countries and from across the globe.”

The early “death squad” hysteria persisted just long enough to catch the interest of hedge funds. The hedge funds saw an opportunity to utilize the PTAB to spook financial markets to their gain. The game plan involved establishing “short” positions in publically traded stocks that have their valuation closely tied to patents, as is the case in the Bio/Pharma sector. Given the PTAB’s early infamy, the bet was that the mere filing of an IPR would spook investors enough to move a stock price to the negative (i.e., quick profit for a short seller). Yet, as hedge funds targeting Bio/Pharma patents have quickly learned, gambling on patent challenges in the unpredictable arts is not a viable, long-term business model.

Since the start of the Supreme Court’s term in October, the Court has already agreed to hear two patent cases, Halo Electronics, Inc. v. Pulse Electronics, Inc. and Stryker Corp. v. Zimmer, Inc. Both cases address the issue of willful infringement and when it is appropriate for a court to award enhanced damages under 35 U.S.C. § 284. The only question that remains is whether the Court will continue its recent trend of taking three or more patent cases a term, or whether it will revert to its longer term average of accepting only one to two patent cases. Against the wider backdrop of the Supreme Court’s shrinking merits docket, it is notable that patent law consistently draws the attention of the Court under Chief Justice Roberts. Here we take a look at four cert petitions raising patent law issues, and handicap the odds of being granted.

”An anecdote is a snapshot, a one-dimensional shard of the big picture. It is lacking in scale, perspective, and data,” authors Steven Levitt and Stephan Dubner write. I was struck by how well the dynamic of anecdote vs. story captures the heated Washington debate over patent legislation we have witnessed in the past few years. The ”patent troll” narrative — fueled by anecdotal tales of mom-and-pop operations snared by fraudulent patent suits and the image of ugly green trolls paraded from the House floor to the White House – became the conventional wisdom on patents almost overnight. The only ”data” offered to support the narrative were compiled from surveys with unscientific methodologies, nonrandomized survey bases and ill-defined notions of a ”troll” that swept in universities, small inventors and anyone who owned a patent but didn’t manufacture, market and distribute the related product.

The NYIPLA asks the Court to grant the petition in order to make clear that judicial review is available when the PTO institutes an IPR proceeding and invalidates patent claims in violation of its statutory authority, and to determine the claim construction standard that the PTO should apply to determine patent validity. The NYIPLA explains that the Supreme Court’s review of both questions is critical at this juncture since to a large and increasing extent, IPRs are supplanting district court litigation as the forum for resolving issues of patent validity based on the prior art, and in proceedings below the Panel was split 2-1 with a vigorous dissent on both issues, and the Federal Circuit then split 6-5 in denying a petition for rehearing en banc.

Chicken Soup for the Soul Day is on November 12th. This is a day to sip on a nice piping hot bowl of soup and feel inspired. However, it’s also an opportunity to learn a little lesson on trademark infringement. In October 2012, Campbell Soup Company filed a trademark suit against Chicken Soup for the Soul Publishing LLC in New Jersey federal court for “willful trademark and trade dress infringement, false designation of origin, trade dress dilution, deceptive acts and practices, and unfair competition.” Campbell Soup Co. and Chicken Soup for the Soul Publishing LLC settled their trademark dispute, but the dispute provides a lesson for on how businesses can avoid trademark infringement issues.

It should go without saying that a good team is a necessary ingredient toward building a successful patent operation. Unfortunately, many companies think they can check the “IP team box” once an in-house IP lawyer has been hired, and/or outside prosecution or litigation counsel has been retained. While those are often necessary ingredients for executing on the patent front, they are by no means the only ingredients. More is required, particularly in today’s patent market, which not only requires an understanding of patent prosecution, but a keen understanding of the business, strategic and financial aspects of patents.

On November 5, 2015, patent owner Retirement Capital Access Management Company LLC filed the most important cert petition this term. This bold effort squarely presents a question circling around academic circles for years: whether the USPTO has the authority to address section 101 (subject matter eligibility) within Covered Business Method (CBM) reviews. To the untrained eye, this issue might sound wonky, jargony, technical and narrow. It is instead profound. If granted, the petition might help restore much needed certainty to the innovation ecosystem.

Looking at raw numbers, California was by far the most inventive state, with over 329,000 non-design patents filed, over 254,000 disposed, and over 180,000 allowed between 2000 and 2010. Texas, New York, Massachusetts, and Washington rounded out the top five, but together had fewer applications, disposed applications, and allowed applications than California alone. The states with the highest allowance rates were Vermont (84%), Idaho (77%), Kansas (74%), Washington (74%) and Iowa (73%).

According to WIPO data, USPTO, EPO and KIPO are major ISAs for U.S. applicants; about 94% of intentional searches have been done by these three patent offices. U.S. applicants may consider the quality of search reports and cost of search fees as the most important factors in selecting an ISA. Search fees vary by ISA, for example, EPO’s rate is relatively high $2,125, USPTO’s rate is $2,080, and KIPO is well known to provide high quality earches with a relevantly competitive cost at $1,219.

For many innovations, in addition to doing a traditional patent search it will be of the utmost importance to search European and east Asian literature, particularly literature from Japan or Korea. The patents issued or published by the USPTO, EPO, KIPO, JPO and SIPO cover more than 90% of the world’s patent documents. But when a particularly lucrative innovation is at stake going beyond the patents can be a worthwhile investment.

I understand that patent owners are upset at having the playing field leveled somewhat. They must feel like the rules of the game have changed, and, to be fair, they have to some extent. But a patent is not real property and it’s not an entitlement. It’s a temporary grant of exclusivity by the government in exchange for sharing one’s invention with the public, assuming that the invention is novel and non-obvious. If it turns out that the original patent issuance was wrong, i.e., someone else came up with the invention first, you have to give up that grant.